Dürr Aktiengesellschaft (FRA:DUE): Does The Earnings Decline Make It An Underperformer?

Simply Wall St
April 20, 2019

In this commentary, I will examine Dürr Aktiengesellschaft’s (FRA:DUE) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the machinery industry performed. As an investor, I find it beneficial to assess DUE’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.

Was DUE’s recent earnings decline indicative of a tough track record?

DUE’s trailing twelve-month earnings (from 31 December 2018) of €157m has
declined by -18% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 4.5%, indicating the rate at which DUE is growing has slowed down.
What could be happening here?
Let’s examine what’s
occurring
with margins and
if
the
rest of the
industry
is facing the same headwind.

DB:DUE Income Statement, April 20th 2019

In terms of returns from investment, Dürr has
fallen short of achieving a 20% return on equity (ROE), recording 16% instead.
Furthermore, its return on assets (ROA) of 4.7% is below the DE Machinery industry of 5.5%, indicating Dürr’s are utilized less efficiently.
And finally, its return on capital (ROC), which also accounts for Dürr’s debt level, has declined over the past 3 years from 20% to 14%.
This correlates with an increase in debt holding, with debt-to-equity ratio rising from 53% to 61% over the past 5 years.

What does this mean?

Dürr’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story.
Companies that are profitable, but have
capricious
earnings, can have many factors
impacting
its business.
I recommend you
continue to research Dürr to get a
better picture
of the stock by looking at:

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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